'Bankrupt' Nottingham City Council considering emergency tax hike

The council has blamed government funding cuts for the crisis

Nottingham City Council has asked the government for permission to raise extra council tax as it looks to balance it books.

The authority declared itself effectively bankrupt in November, warning it would not be able to plug a £23m spending gap this financial year.

It previously requested special permission for various methods to raise £65m to tackle its shortfalls.

Now it has confirmed a council tax rise over the usual 5% cap is one of them.

Currently the council is proposing a 4.99% rise in its share of city residents' council tax bills from April.

Any increase over that level usually requires a referendum but the Local Democracy Reporting Service (LDRS) said the city council had asked the Department of Levelling Up, Housing and Communities (DLUHC) if it could proceed without a public vote.

Birmingham City Council and Croydon Council, which preceded Nottingham in issuing a section 114 notice, have received permission to increase their precepts by 10% and 15% respectively in recent years.

DLUHC has been approached for comment but a decision on the measure was expected before the council's budget meeting on 4 March.

The council is seeking £65m of emergency financial support from the government

City councillors would have to accept or reject an entire emergency package, and would not be able to pick and choose different elements, the LDRS said.

Ross Brown, the council's corporate director for finance and resources, said: "As part of the Emergency Financial Support submission, the council has explored what powers could be granted, including raising council tax above 4.99, which we have expressed interest in."

Mr Brown said he had not had specific further discussions with the government about the detail of this.

If the government approves an emergency package of financial support the council could be permitted to sell assets and spend the money on day-to-day operational costs, which is usually prohibited.

The requested emergency funding would be split into up to £25m for the current year, and up to £40m for the next.

The council has a £23m budget gap for the current financial year, and £53m for the 12 months following that.

Risk of commissioners

However, council officials believe the support may only be provided if the authority goes through with sweeping cuts including youth services, community centres, libraries and public transport.

Councillors have expressed concern about the long-term damage that balancing the upcoming budget would cause to the city.

The council's Labour-run executive refused to endorse the current proposed package of cuts when it met on Tuesday.

Chief executive Mel Barrett warned the council risked the government appointing commissioners with sweeping powers for several years if it did not set a balanced budget.

"We need to survive the next year in order to plan effectively for the medium-term," he said.